GAUNT v. SCHADA

The opinion of the court was delivered by: JAMES MORAN, Senior District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs Rory and Julie Gaunt (the Gaunts) brought this
action against defendants Steven Schada, Karen Schada and Scott
Schada (the Schadas) for specific performance on a real estate
contract. Defendants filed a motion for summary judgment and
plaintiffs filed a cross-motion for summary judgment. For the
following reasons, defendants' motion is denied and plaintiffs'
motion is granted.

BACKGROUND

The following facts are taken from the parties' Rule 56
statements of uncontested facts. Unfortunately, neither
plaintiffs nor defendants responded to the others' statement of
facts as required under Local Rule 56(b).*fn1 Nonetheless,
based on the parties' statements and exhibits, the following is
uncontested. At the center of this dispute is a vacation home in
New Buffalo, Michigan, near the shores of Lake Michigan. In February 2004,
plaintiffs, residents of Massachusetts, entered into a contract
with defendants, residents of Illinois, for the purchase of the
property. Steven and Karen Schada, husband and wife, initially
owned the property with Steven's brother, Scott; however, in May
2004, Steven and Karen purchased Scott's interest. The Gaunts
agreed to pay the Schadas $635,000 for the property, and
deposited $5,000 in escrow as earnest money.

After entering into their sale agreement, the parties executed
two subsequent addenda to the contract (Addendum 2 and Addendum
3). The second addendum, signed by the parties on March 5 and 6,
2004, recited that the home inspector found problems with the
roof, electrical service and septic system, and allowed for
additional time to assess the repairs needed. The third addendum,
signed March 19, 2004, provided that the sale price would remain
the same, but defendants would receive an $80,000 credit on the
sale price at the time of closing. It also specified that the
sale would be insured by Chicago Title Insurance Co. (Chicago
Title). In addition, the addendum added the contract's first
mention of the property's private beach rights. It stated:
"Seller represents and warrants that private beach rights to
Sturgeon Beach are included in sale of property." Plaintiffs
testify in affidavits that these beach rights, which allow an
occupant to easily walk from the property to a private
association beach, influenced their decision to purchase the
property.

The real estate contract stated that the sale of the property
"shall be closed on May 1, 2004, or before, if mutually agreed by
the parties." The closing date was subject to two exceptions
noted in the contract: buyers could have up to fifteen extra days
in order to secure a new mortgage, for which they have a written
commitment, and sellers could have up to thirty additional days
in order to correct defects in the property's title. Believing
all the documents to be in order, the Gaunts and the Schadas
agreed to close on April 16, 2004, two weeks before the contract's stated closing date. However, on April 14, 2004,
Charles Hilmer, plaintiffs' attorney, received a revised copy of
the title commitment from Chicago Title. Hilmer had already
reviewed an earlier copy of Chicago Title's commitment to insure
the property and the beach access rights. Unlike the previous
version, the revised title commitment did not commit to insure
the property's beach access rights. On or about March 16, 2004,
neighbors of the Schadas filed suit seeking to clarify which
owners in the residential area had beach access rights. The
action named the Schadas among the defendants. As a result of
this beach rights litigation, Chicago Title would not commit to
insure the property's beach access rights.

On April 15, 2004, the day before the parties' scheduled early
closing, Hilmer faxed defendants' counsel Lawrence Frankle a
letter informing him that Rory Gaunt was concerned about "the
unusual liabilities and expenses that he will be exposed to due
to the purchase" and that he would not proceed with the closing
unless he received a $150,000 reduction in the sale price.
Frankle faxed a reply letter that same day stating that there
were no unusual liabilities or expenses, and though they would
not agree to a price reduction they would be willing to escrow a
certain amount of money to allay any anxieties regarding the
purchase. Nonetheless, the letter informed plaintiffs that
defendants expected them to close the next day, as scheduled.
However, plaintiffs did not show up at the closing the next day.

Following the aborted early closing, the parties remained in
communication. In a letter to Frankle dated April 27, 2004,
Hilmer discussed attempts to settle the beach rights issue. He
explained that defendants' attempt to attain insurance for the
beach rights from Metropolitan Title would not satisfy his
clients because the realty contract states that Chicago Title
will provide the title insurance. The letter informed defendants
that plaintiffs would purchase the property on the closing date
without title insurance for the beach access rights, if the price
was reduced by $150,000. Without this price reduction, the letter
warned that plaintiffs would terminate the contract and request a return of their earnest
money. The parties did not close on May 1, 2004.

In his declaration, Hilmer states that following their exchange
of letters, Frankle told him that he thought he could get the
beach rights litigation dismissed, allowing plaintiffs to get
title insurance for the beach rights. On June 22, 2004, Frankle
faxed Hilmer a copy of a proposed summary judgment order in the
beach rights litigation. Two weeks later, Frankle faxed Hilmer a
copy of the order dismissing the case, signed by the state court
judge adjudicating the matter. Once the judge had dismissed the
beach rights litigation, Frankle notified Chicago Title. In a
letter dated July 20, 2004, Frankle inquired whether the title
company would reinstate its earlier title commitment covering the
property's beach rights. The letter stated: "Our buyers in the
Schada sale, Rory and Julie Gaunt, are still willing to go
forward with the purchase of the Schadas' property if Chicago
Title will reinstate the commitment issued prior to this lawsuit
being filed." At no point prior to this had either party issued
written notification terminating the contract, nor had either
party moved to recover the earnest money plaintiffs had deposited
for the purchase the property.

On July 30, 2004, Frankle faxed a letter to Hilmer, which he
did not receive until August 6, 2004. The letter read: "The
Schadas will sell to your client and provide a warranty deed with
beach rights, as well as title insurance showing beach rights,
but the purchase price will be $600,000.00 and closing will be
within two weeks." Hilmer replied on August 12, 2004, that
plaintiffs were ready to close on a mutually convenient date, but
that they would need to arrange the date with their lender.
Defendants demand for $45,000 more than the price agreed to in
their prior contract and addendum, and their refusal to
accommodate a later closing date led plaintiffs to file this
action for specific performance on September 21, 2004. In late
August, or early September, prior to plaintiffs filing suit,
defendants entered into a sales agreement with a third party to sell the property for $625,000.

DISCUSSION

Our function in ruling on a motion for summary judgment is to
determine if there is a genuine issue of material fact for trial.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If
the evidence on file shows that no such issue exists and the
moving party is entitled to judgment as a matter of law we will
grant the motion. Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986); Bennett v. Roberts, 295 F.3d 687, 694 (7th
Cir. 2002). A "metaphysical doubt as to the material facts" is
not enough to create a genuine issue of fact for trial,
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 585 (1986); the evidence must allow for a reasonable
trier of fact to find for the non-movant. Buscaglia v. United
States, 25 F.3d 530, 534 (7th Cir. 1994). When reviewing a
motion for summary judgment, we draw all inferences in the light
most favorable to the non-movant. DeValk Lincoln Mercury, Inc.
v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir. 1987). The
court considers the plaintiffs' and the defendants' cross-motions
independently  the failure of one party's motion for summary
judgment does not mandate the success of the motion of the other
party.

The Michigan Supreme Court has repeatedly stated that "specific
performance is not a remedy or right but rests in the sound
discretion of the court." Friedman v. Winshall, 343 Mich. 647,
653, 73 N.W.2d 248, 252 (Mich. 1955). Though equitable principles
should be applied in each case, and specific performance may not
be arbitrarily refused, a decision on specific performance
depends on the particular circumstances of the case. Id.;
First Baptist Church of Dearborn v. Solner, 341 Mich. 209, 216,
67 N.W.2d 252, 255 (Mich. 1954).

In their motion for summary judgment, defendants argue that
plaintiffs are not entitled to specific performance because they
never tendered performance and they breached the contract.
Defendants contend that plaintiffs failed to tender the agreed
upon purchase price by the date required in the sale contract, May 1, 2004. They
further maintain that plaintiffs' refusal to close the real
estate contract on ...

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